As filed with the Securities and Exchange Commission on December 22, 2011

Registration No. 333-          

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form S-1

OXiGENE, INC.

Delaware		2836		13-3679168
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(IRS Employer Identification No.)

701 Gateway Blvd., Suite 210
South San Francisco, California 94080
(650) 635-7000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Peter J. Langecker, M.D., Ph.D.
Chief Executive Officer
OXiGENE, Inc.
701 Gateway Blvd., Suite 210
South San Francisco, California 94080
(650) 635-7000
(Name, address, including zip code, and telephone number, including area code, of agent for service)

     Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement, as determined by the selling stockholder.

     If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. þ

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company þ

CALCULATION OF REGISTRATION FEE

Proposed

Proposed

Amount

Maximum

maximum

Title of each class of

to be

Offering Price

aggregate

Amount of

securities to be registered

registered (1)(2)

Per Share (3)

offering price (2)(3)

registration fee

Common stock, par value $0.01 per share

4,849,101

$1.03

$4,994,574.03

$572.38

Rights to Purchase Common Stock

(4)

(4)

(4)

None

(1)		Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the shares being registered hereunder include such indeterminate number of shares of the registrant’s common stock as may be issuable with respect to the shares being registered hereunder to prevent dilution by reason of any stock dividend, stock split, recapitalization or other similar transaction.
(2)		Includes shares issuable to the selling stockholder from time to time upon the delivery of purchase notices pursuant to the terms of a purchase agreement dated as of November 28, 2011 between the Company and the selling stockholder (the “Purchase Agreement”), 299,700 shares previously issued to the selling stockholder as Initial Commitment Shares pursuant to the Purchase Agreement, and 299,401 shares issuable to the selling stockholder from time to time as Additional Commitment Shares pursuant to the terms of the Purchase Agreement.
(3)		Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) of the Securities Act. The proposed maximum offering price per share and the proposed maximum aggregate offering price based upon the average of the high ($1.08) and low ($0.98) sales prices of the Registrant’s common stock on December 16, 2011(within five business days of the filing date of this registration statement), as reported on The NASDAQ Capital Market. The Registrant is not selling any shares of common stock in this offering and therefore will not receive any proceeds from this offering. However, the Registrant may receive up to $20,000,000 under the Purchase Agreement with the selling stockholder.
(4)		Pursuant to the Stockholder Rights Agreement, dated as of March 24, 2005, between the Registrant and American Stock Transfer & Trust Company, LLC, as amended (the “Rights Agreement”), each share of Common Stock has an attached right to purchase one share of Common Stock, which rights are not currently exercisable, on the terms set forth in the Rights Agreement. No separate consideration will be received for the Rights.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

 

 

SUBJECT TO COMPLETION, DATED DECEMBER 22, 2011

PROSPECTUS

OXiGENE, INC.

4,849,101 Shares
COMMON STOCK

          This prospectus relates to the sale of up to 4,849,101 shares of our common stock, par value $0.01 per share, which may be offered by the selling stockholder, Lincoln Park Capital Fund, LLC, or LPC. The shares of common stock being offered by the selling stockholder are issuable pursuant to the purchase agreement dated as of November 28, 2011 between the Company and LPC, or the Purchase Agreement. See the section of this prospectus entitled “The LPC Transaction” for a description of the Purchase Agreement and the section entitled “Selling Stockholder” for additional information regarding LPC. The prices at which LPC may sell the shares will be determined by the prevailing market price for the shares or in negotiated transactions.

          We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of shares by the selling stockholder.

          The selling stockholder may sell the shares of common stock described in this prospectus in a number of different ways and at varying prices. We provide more information about how the selling stockholder may sell its shares of common stock in the section titled “Plan of Distribution” on page 21. We will not be paying any underwriting discounts or commissions in this offering. We will pay the expenses incurred in registering the shares, including legal and accounting fees.

          In February 2011, our board of directors voted unanimously to implement a 1:20 reverse stock split of our common stock, following authorization of the reverse split by a stockholder vote on December 21, 2010. The reverse split became effective on February 22, 2011. All of the share and per share values discussed in this prospectus have been adjusted to reflect the effect of the reverse stock split.

          Our common stock is quoted on The NASDAQ Capital Market under the symbol “OXGN”. On December 21, 2011, the last reported sale price of our common stock as reported on The NASDAQ Capital Market was $1.03 per share. We have applied to have the shares of common stock offered pursuant to this prospectus approved for listing on The NASDAQ Capital Market.

          Investing in our securities involves risks. See “Risk Factors” beginning on page 7 of this prospectus for a discussion of these risks.

          The selling stockholder is an “underwriter” within the meaning of the Securities Act of 1933, as amended.

          Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                  .

TABLE OF CONTENTS

PROSPECTUS SUMMARY			2
RISK FACTORS			7
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			15
USE OF PROCEEDS			16
THE LPC TRANSACTION			17
SELLING STOCKHOLDER			20
PLAN OF DISTRIBUTION			21
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES			22
SELECTED FINANCIAL DATA			23
STATEMENT OF OPERATIONS DATA			24
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			26
BUSINESS			39
MANAGEMENT			53
EXECUTIVE COMPENSATION			59
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			65
LIMITATION OF DIRECTORS’ LIABILITY AND INDEMNIFICATION			66
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			67
DESCRIPTION OF CAPITAL STOCK			68
LEGAL MATTERS			69
EXPERTS			69
WHERE YOU CAN FIND MORE INFORMATION			69
EX-3.1
EX-5.1
EX-23.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

          You should rely only on the information contained or incorporated by reference into this prospectus. We have not, and the selling stockholder has not, authorized anyone to provide you with additional or different information. These securities are not being offered in any jurisdiction where the offer is not permitted. You should assume that the information in this prospectus is accurate only as of the date on the front of the document and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or of any sale of our common stock. Unless the context otherwise requires, references to “we,” “our,” “us,” or the “Company” in this prospectus mean OXiGENE, Inc.

RISK FACTORS

          An investment in our common stock involves a high degree of risk. You should carefully read and consider the risks and uncertainties described below together with all of the other information contained in this prospectus, including our financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our common stock. If any of these risks actually occur, our business, prospects, financial condition, results of operations or cash flows could be materially harmed. In that event, the market price of our common stock could decline and you could lose all or part of your investment.

Risks Related to Our Business

We have recently implemented a reduction in force, and now have only a limited number of employees to manage and operate our business.

          As announced on September 1, 2011, we have implemented a restructuring plan designed to focus our capital resources on our most promising early-stage clinical programs and further reduce our cash utilization. This restructuring plan involved a reduction in force of 11 full-time equivalent employees, or approximately 61%. As of the date of this prospectus, we have six full-time employees. This reduction in force and focus on reducing cash utilization requires us to manage and operate our business in a highly efficient manner. We cannot assure you that we will be able to retain adequate staffing levels to run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish.

We will be required to raise additional funds to finance our operations and remain a going concern; we may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.

          Our operations to date have consumed substantial amounts of cash. Negative cash flows from our operations are expected to continue over at least the next several years. Our cash utilization amount is highly dependent on the progress of our product development programs, particularly, the results of our preclinical and clinical studies, the cost, timing and outcomes of regulatory approval for our product candidates, the terms and conditions of our contracts with service providers for these programs, and the rate of recruitment of patients in our human clinical trials. In addition, the further development of our ongoing clinical trials will depend on upcoming analysis and results of those studies and our cash resources at that time.

          We expect cash on hand as of December 1, 2011 to fund our operations, supporting the projects we currently have ongoing and those costs we have committed to for future projects, through the first half of 2013. In order to remain a going concern beyond the first half of 2013, we will require significant additional funding. Should we be able to sell the shares included in this prospectus at a price equivalent to approximately $1.00 per share, we would be able to fund our operations through the entire 2013 fiscal year. Additional funds to finance our operations may not be available on terms that we deem acceptable, or at all. If we fail to secure financing before the end of the first half of 2013, we may be forced to cease all of our clinical and other activities.

          Our ongoing capital requirements will depend on numerous factors, including: the progress and results of preclinical testing and clinical trials of our product candidates under development, and in particular whether we initiate the proposed FACT 2 study in ATC; the progress of our research and development programs; the time and costs expended and required to obtain any necessary or desired regulatory approvals; the resources, if any, that we devote to develop manufacturing methods and advanced technologies; our ability to enter into licensing arrangements, including any unanticipated licensing arrangements that may be necessary to enable us to continue our development and clinical trial programs; the costs and expenses of filing, prosecuting and, if necessary, enforcing our patent claims, or defending against possible claims of infringement by third-party patent or other technology rights; the cost of commercialization activities and arrangements, if any, undertaken by us; and, if and when approved, the demand for our products, which demand depends in turn on circumstances and uncertainties that cannot be fully known, understood or quantified unless and until the time of approval, including the range of indications for which any product is granted approval.

          If we are unable to raise additional funds when needed, we will not be able to continue development of our product candidates or we will be required to delay, scale back or eliminate some or all of our development programs or cease operations. We may seek to raise additional funds through public or private financing, strategic partnerships or other arrangements. Any additional equity financing may be dilutive to our current stockholders and debt financing, if available, may involve restrictive covenants. If we raise funds through collaborative or licensing arrangements, we may be required to relinquish, on terms that are not favorable to us, rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize. Our failure to raise capital when needed will materially harm our business, financial condition and results of operations. As a result of this uncertainty and the substantial doubt about our ability to continue as a going concern as of December 31, 2010, the Report of Independent Registered Public Accounting Firm at the beginning of the Consolidated Financial Statements section in this prospectus includes a going concern explanatory paragraph.

We have a history of losses, and we anticipate that we will continue to incur losses in the future.

          We have experienced net losses every year since our inception and, as of September 30, 2011, had an accumulated deficit of approximately $215,008,000. We anticipate continuing to incur substantial additional losses over at least the next several years due to, among other factors, the need to expend substantial amounts on our continuing clinical trials with respect to our VDA drug candidates, technologies, and anticipated research and development activities and the general and administrative expenses associated with those activities. We have not commercially introduced any product and our potential products are in varying early stages of development and testing. Our ability to attain profitability will depend upon our ability to develop products that are effective and commercially viable, to obtain regulatory approval for the manufacture and sale of our products and to license or otherwise market our products successfully. We may never achieve profitability, and even if we do, we may not be able to sustain being profitable.

Due in part to our constrained financial resources, we may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates or those that are in-licensed.

          We have limited technical, managerial and financial resources to determine the indications on which we should focus the development efforts related to our product candidates. Due to our limited available financial resources, we have had to curtail clinical development programs and activities that might otherwise have led to more rapid progress of our product candidates through the regulatory and development processes. For example, in February 2010 we announced a restructuring of our clinical development programs. As a part of that restructuring, we stopped enrollment in our FACT trial and have redirected available resources away from other clinical trial programs in favor of those we believe to have the highest value. In addition, in September 2011, we implemented a reduction in force, and now have only a limited number of employees to manage and operate our business and clinical programs. We may make incorrect determinations with regard to the indications and clinical trials on which to focus the available resources that we do have. Furthermore, we cannot assure you that we will be able to retain adequate staffing levels to run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish. The decisions to allocate our research, management and financial resources toward particular indications or therapeutic areas for our product candidates may not lead to the development of viable commercial products and may divert resources from better opportunities. Similarly, our decisions to delay or terminate drug development programs may also cause us to miss valuable opportunities. In addition, from time to time, we may in-license or otherwise acquire product candidates to supplement our internal development activities. Those activities may use resources that otherwise would have been devoted to our internal programs. We cannot assure you that any resources that we devote to acquired or in-licensed programs will result in any products that are superior to our internally developed products.

Our product candidates have not completed clinical trials, and may never demonstrate sufficient safety and efficacy in order to do so.

          Our product candidates are in an early stage of development. In order to achieve profitable operations, we alone or in collaboration with others, must successfully develop, manufacture, introduce and market our products. The time frame necessary to achieve market success for any individual product is long and uncertain. The products currently under development by us will require significant additional research and development and extensive preclinical and clinical testing prior to application for commercial use. A number of companies in the biotechnology and pharmaceutical industries have suffered significant setbacks in clinical trials, even after showing promising results in early or later-stage studies or clinical trials. Although we have obtained some favorable results to-date in preclinical studies and clinical trials of certain of our potential products, such results may not be indicative of results that will ultimately be obtained in or throughout such clinical trials, and clinical trials may not show any of our products to be safe or capable of producing a desired result. Additionally, we may encounter problems in our clinical trials that will cause us to delay, suspend or terminate those clinical trials. Further, our research or product development efforts may not be successfully completed, any compounds currently under development by us may not be successfully developed into drugs, any potential products may not receive regulatory approval on a timely basis, if at all, and competitors may develop and bring to market products or technologies that render our potential products obsolete. If any of these problems occur, our business would be materially and adversely affected.

We depend heavily on our executive officers, directors, and principal consultants and the loss of their services would materially harm our business.

          We believe that our success depends, and will likely continue to depend, upon our ability to retain the services of our current executive officers, directors, principal consultants and others. The loss of the services of any of these individuals could have a material adverse effect on our business. In addition, we have established relationships with universities, hospitals and research institutions, which have historically provided, and continue to provide, us with access to research laboratories, clinical trials, facilities and patients. Additionally, we believe that we may, at any time and from time to time, materially depend on the services of consultants and other unaffiliated third parties. We cannot assure you that consultants and other unaffiliated third parties will provide the level of service to us that we require in order to achieve our business objectives.

Our industry is highly competitive, and our products may become technologically obsolete.

          We are engaged in a rapidly evolving field. Competition from other pharmaceutical companies, biotechnology companies and research and academic institutions is intense and expected to increase. Many of those companies and institutions have substantially

greater financial, technical and human resources than we do. Those companies and institutions also have substantially greater experience in developing products, in conducting clinical trials, in obtaining regulatory approval and in manufacturing and marketing pharmaceutical products. Our competitors may succeed in obtaining regulatory approval for their products more rapidly than we do. Competitors have developed or are in the process of developing technologies that are, or in the future may be, the basis for competitive products. We are aware of at least one other company that currently has a clinical-stage VDA for use in an oncology indication. Some of these competitive products may have an entirely different approach or means of accomplishing the desired therapeutic effect than products being developed by us. Our competitors may succeed in developing technologies and products that are more effective and/or cost competitive than those we are developing, or that would render our technology and products less competitive or even obsolete. In addition, one or more of our competitors may achieve product commercialization or patent protection earlier than we do, which could materially adversely affect us.

We have licensed in rights to ZYBRESTAT, OXi4503 and other programs from third parties. If our license agreements terminate, we may lose the licensed rights to our product candidates, including ZYBRESTAT and OXi4503, and we may not be able to continue to develop them or, if they are approved, market or commercialize them.

          We depend on license agreements with third parties for certain intellectual property rights relating to our product candidates, including patent rights. Currently, we have licensed in patent rights from Arizona State University, or ASU, and the Bristol-Myers Squibb Company for ZYBRESTAT and OXi4503 and from Baylor University for other programs. In general, our license agreements require us to make payments and satisfy performance obligations in order to keep these agreements in effect and retain our rights under them. These payment obligations can include upfront fees, maintenance fees, milestones, royalties, patent prosecution expenses, and other fees. These performance obligations typically include diligence obligations. If we fail to pay, be diligent or otherwise perform as required under our license agreements, we could lose the rights under the patents and other intellectual property rights covered by the agreements. While we are not currently aware of any dispute with any licensors under our material agreements with them, if disputes arise under any of our in-licenses, including our in-licenses from ASU and the Bristol-Myers Squibb Company, and Baylor University, we could lose our rights under these agreements. Any such disputes may or may not be resolvable on favorable terms, or at all. Whether or not any disputes of this kind are favorably resolved, our management’s time and attention and our other resources could be consumed by the need to attend to and seek to resolve these disputes and our business could be harmed by the emergence of such a dispute.

          If we lose our rights under these agreements, we may not be able to conduct any further activities with the product candidate or program that the license covered. If this were to happen, we might not be able to develop our product candidates further, or following regulatory approval, if any, we might be prohibited from marketing or commercializing them. In particular, patents previously licensed to us might after termination be used to stop us from conducting these activities.

We depend extensively on our patents and proprietary technology, and we must protect those assets in order to preserve our business.

          Although we expect to seek patent protection for any compounds we discover and/or for any specific use we discovers for new or previously known compounds, any or all of them may not be subject to effective patent protection. Further, the development of regimens for the administration of pharmaceuticals, which generally involve specifications for the frequency, timing and amount of dosages, has been, and we believe, may continue to be, important to our effort, although those processes, as such, may not be patentable. In addition, the issued patents may be declared invalid or our competitors may find ways to avoid the claims in the patents.

          Our success will depend, in part, on our ability to obtain patents, protect our trade secrets and operate without infringing on the proprietary rights of others. As of December 1, 2011, we were the exclusive licensee, sole assignee or co-assignee of twenty-eight (28) granted United States patents, fifteen (15) pending United States patent applications, three (3) pending Patent Cooperation Treaty international patent applications, and granted patents and/or pending applications in several other major markets, including the European Union, Canada and Japan. The patent position of pharmaceutical and biotechnology firms like us are generally highly uncertain and involves complex legal and factual questions, resulting in both an apparent inconsistency regarding the breadth of claims allowed in United States patents and general uncertainty as to their legal interpretation and enforceability. Accordingly, patent applications assigned or exclusively licensed to us may not result in patents being issued, any issued patents assigned or exclusively licensed to us may not provide us with competitive protection or may be challenged by others, and the current or future granted patents of others may have an adverse effect on our ability to do business and achieve profitability. Moreover, since some of the basic research relating to one or more of our patent applications and/or patents were performed at various universities and/or funded by grants, one or more universities, employees of such universities and/or grantors could assert that they have certain rights in such research and any resulting products. Further, others may independently develop similar products, may duplicate our products, or may design around our patent rights. In addition, as a result of the assertion of rights by a third party or otherwise, we may be required to obtain licenses to patents or other proprietary rights of others in or outside of the United States. Any licenses required under any such patents or proprietary rights may not be made available on terms acceptable to us, if at all. If we do not obtain such licenses, we could encounter delays in product market introductions while our attempts to design around such patents or could find that the development, manufacture or sale of products requiring such licenses is foreclosed. In addition, we could incur substantial costs in defending

ourselves in suits brought against us or in connection with patents to which we hold licenses or in bringing suit to protect our own patents against infringement.

          We require employees and the institutions that perform our preclinical and clinical trials to enter into confidentiality agreements with us. Those agreements provide that all confidential information developed or made known to the individual during the course of the relationship with us to be kept confidential and not to be disclosed to third parties, except in specific circumstances. Any such agreement may not provide meaningful protection for our trade secrets or other confidential information in the event of unauthorized use or disclosure of such information.

If third parties on which we rely for clinical trials do not perform as contractually required or as we expect, we may not be able to obtain regulatory approval for or commercialize our product candidates.

          We do not have the ability to independently conduct the clinical trials required to obtain regulatory approval for our product candidates. We depend on independent clinical investigators and, in some cases, contract research organizations and other third-party service providers to conduct the clinical trials of our product candidates and expect to continue to do so. We rely heavily on these parties for successful execution of our clinical trials, and we do not control many aspects of their activities. Nonetheless, we are responsible for confirming that each of our clinical trials is conducted in accordance with our general investigational plan and protocol. Moreover, the FDA and corresponding foreign regulatory authorities require us and our clinical investigators to comply with regulations and standards, commonly referred to as good clinical practices, for conducting and recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the trial participants are adequately protected. Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. Third parties may not complete activities on schedule or may not conduct our clinical trials in accordance with regulatory requirements or the respective trial plans and protocols. The failure of these third parties to carry out their obligations could delay or prevent the development, approval and commercialization of our product candidates or result in enforcement action against us.

Our products may result in product liability exposure, and it is uncertain whether our insurance coverage will be sufficient to cover all claims.

          The use of our product candidates in clinical trials and for commercial applications, if any, may expose us to liability claims, in the event such product candidates cause injury or disease, or result in adverse effects. These claims could be made directly by health care institutions, contract laboratories, patients or others using such products. Although we have obtained liability insurance coverage for our ongoing clinical trials, this coverage may not be in amounts sufficient to protect us from any product liability claims or product recalls which could have a material adverse effect on our financial condition and prospects. Further, adverse product and similar liability claims could negatively impact our ability to obtain or maintain regulatory approvals for our technology and product candidates under development.

If we do not obtain required regulatory approvals, we will be unable to market and sell our product candidates.

          Our product candidates are subject to extensive governmental regulations relating to development, clinical trials, manufacturing, and commercialization. Rigorous preclinical testing and clinical trials and an extensive regulatory review and approval process are required to be successfully completed in the United States and in many foreign jurisdictions before a new drug can be sold. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain, and subject to unanticipated delays. The time required to obtain approval by the FDA is unpredictable but typically exceeds five years following the commencement of clinical trials, depending upon the complexity of the product candidate.

          We have limited experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA. In connection with the clinical trials of our product candidates, we face risks that:

	•		the product candidate may not prove to be safe and efficacious;
	•		patients may die or suffer serious adverse effects for reasons that may or may not be related to the product candidate being tested;
	•		the results of later-phase clinical trials may not confirm the results of earlier clinical trials; and
	•		the results may not meet the level of statistical significance or clinical benefit-to-risk ratio required by the FDA or other regulatory agencies for marketing approval.

          Only a small percentage of product candidates for which clinical trials are initiated are the subject of NDAs and even fewer receive approval for commercialization. Furthermore, even if we do receive regulatory approval to market a product candidate, any such approval may be subject to limitations such as those on the indicated uses for which we may market the product.

If clinical trials for our product candidates are prolonged, delayed or suspended, we may be unable to commercialize our product candidates on a timely basis, which would require us to incur additional costs and delay our receipt of any revenue from potential product sales.

          We cannot predict whether we will encounter problems with any of our completed, ongoing or planned clinical trials that will cause us or any regulatory authority to delay or suspend those clinical trials or delay the analysis of data derived from them. A number of events, including any of the following, could delay the completion of our other ongoing and planned clinical trials and negatively impact our ability to obtain regulatory approval for, and to market and sell, a particular product candidate:

	•		conditions imposed on us by the FDA or any foreign regulatory authority regarding the scope or design of our clinical trials;
	•		delays in obtaining, or our inability to obtain, required approvals from institutional review boards or other reviewing entities at clinical sites selected for participation in our clinical trials;
	•		insufficient supply of our product candidates or other materials necessary to conduct and complete our clinical trials;
	•		slow enrollment and retention rate of subjects in clinical trials;
	•		negative or inconclusive results from clinical trials, or results that are inconsistent with earlier results;
	•		serious and unexpected drug-related side effects; and
	•		failure of our third-party contractors to comply with regulatory requirements or otherwise meet their contractual obligations to us.

          Commercialization of our product candidates may be delayed by the imposition of additional conditions on our clinical trials by the FDA or any foreign regulatory authority or the requirement of additional supportive studies by the FDA or any foreign regulatory authority. In addition, clinical trials require sufficient patient enrollment, which is a function of many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites, the availability of effective treatments for the relevant disease, the conduct of other clinical trials that compete for the same patients as our clinical trials, and the eligibility criteria for our clinical trials. Our failure to enroll patients in our clinical trials could delay the completion of the clinical trial beyond our expectations. In addition, the FDA could require us to conduct clinical trials with a larger number of subjects than we have projected for any of our product candidates. We may not be able to enroll a sufficient number of patients in a timely or cost-effective manner. Furthermore, enrolled patients may drop out of our clinical trials, which could impair the validity or statistical significance of the clinical trials.

          We do not know whether our clinical trials will begin as planned, will need to be restructured, or will be completed on schedule, if at all. Delays in our clinical trials will result in increased development costs for our product candidates. In addition, if our clinical trials are delayed, our competitors may be able to bring products to market before we do and the commercial viability of our product candidates could be limited.

Our product candidates will remain subject to ongoing regulatory review even if they receive marketing approval, and if we fail to comply with continuing regulations, we could lose these approvals and the sale of any approved commercial products could be suspended.

          Even if we receive regulatory approval to market a particular product candidate, the manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, and record keeping related to the product will remain subject to extensive regulatory requirements. If we fail to comply with the regulatory requirements of the FDA and other applicable domestic and foreign regulatory authorities or previously unknown problems with any approved product, manufacturer, or manufacturing process is discovered, we could be subject to administrative or judicially imposed sanctions, including:

	•		restrictions on the products, manufacturers, or manufacturing processes;
	•		warning letters;
	•		civil or criminal penalties;
	•		fines;
	•		injunctions;
	•		product seizures or detentions;

	•		pressure to initiate voluntary product recalls;
	•		suspension or withdrawal of regulatory approvals; and
	•		refusal to approve pending applications for marketing approval of new products or supplements to approved applications.

If physicians and patients do not accept our future products or if the markets for indications for which any product candidate is approved is smaller than expected, we may be unable to generate significant revenue, if any.

          Even if any of our product candidates obtain regulatory approval, they may not gain market acceptance among physicians, patients, and third-party payors. Physicians may decide not to recommend our drugs for a variety of reasons including:

	•		timing of market introduction of competitive products;
	•		demonstration of clinical safety and efficacy compared to other products;
	•		cost-effectiveness;
	•		limited or no coverage by third-party payors;
	•		convenience and ease of administration;
	•		prevalence and severity of adverse side effects;
	•		restrictions in the label of the drug;
	•		other potential advantages of alternative treatment methods; and
	•		ineffective marketing and distribution support of our products.

          If any of our product candidates are approved, but fail to achieve market acceptance, we may not be able to generate significant revenue and our business would suffer.

We have no manufacturing capacity, and have relied and expect to continue to rely on third-party manufacturers to produce our product candidates.

          We do not own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates or any of the compounds that we are testing in our preclinical programs, and we lack the resources and the capabilities to do so. As a result, we currently rely, and we expect to rely in the future, on third-party manufacturers to supply our product candidates. Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured our product candidates or products ourselves, including:

	•		reliance on the third party for manufacturing process development, regulatory compliance and quality assurance;
	•		limitations on supply availability resulting from capacity and scheduling constraints of the third party;
	•		the possible breach of the manufacturing agreement by the third party because of factors beyond our control; and
	•		the possible termination or non-renewal of the agreement by the third party, based on our own business priorities, at a time that is costly or inconvenient for us.

          If we do not maintain our developed important manufacturing relationships, we may fail to find replacement manufacturers or develop our own manufacturing capabilities which could delay or impair our ability to obtain regulatory approval for our products and substantially increase our costs or deplete profit margins, if any. If we do find replacement manufacturers, we may not be able to enter into agreements with them on terms and conditions favorable to us, and there could be a substantial delay before new facilities could be qualified and registered with the FDA and foreign regulatory authorities.

          The FDA and foreign regulatory authorities require manufacturers to register manufacturing facilities. The FDA and corresponding foreign regulators also inspect these facilities to confirm compliance with current good manufacturing practices, or cGMPs. Contract manufacturers may face manufacturing or quality control problems causing drug substance production and shipment delays or a situation where the contractor may not be able to maintain compliance with the applicable cGMP requirements. Any failure to comply with cGMP requirements or other FDA and comparable foreign regulatory requirements could adversely affect our clinical research activities and our ability to develop our product candidates and market our products after approval.

          Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop our product candidates and commercialize any products that receive regulatory approval on a timely basis.

The uncertainty associated with pharmaceutical reimbursement and related matters may adversely affect our business.

          Market acceptance and sales of any one or more of our product candidates that we develop will depend on reimbursement policies and may be affected by future healthcare reform measures. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drugs they will cover and establish payment levels. We cannot be certain that reimbursement will be available for any product candidates that we develop. Also, we cannot be certain that reimbursement policies will not reduce the demand for, or the price paid for, our products. If reimbursement is not available or is available on a limited basis, we may not be able to successfully commercialize any product candidates that we develop.

          In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, also called the Medicare Modernization Act, or MMA, changed the way Medicare covers and pays for pharmaceutical products. The legislation established Medicare Part D, which expanded Medicare coverage for outpatient prescription drug purchases by the elderly but provided authority for limiting the number of drugs that will be covered in any therapeutic class. The MMA also introduced a new reimbursement methodology based on average sales prices for physician-administered drugs.

          The United States and several foreign jurisdictions are considering, or have already enacted, a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access to healthcare. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. We expect to experience pricing pressures in connection with the sale of any products that we develop due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative proposals.

          In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively, ACA, became law in the U.S. The goal of ACA is to expand coverage for the uninsured while at the same time containing overall healthcare costs. ACA is expected to expand and increase industry rebates for drugs covered under Medicaid programs and make changes to the coverage requirements under the Medicare Part D program. While we cannot predict what impact on federal reimbursement policies this legislation will have in general or on our business specifically, the ACA may result in downward pressure on pharmaceutical reimbursement, which could negatively affect market acceptance of our product candidates. Members of the U.S. Congress and some state legislatures are seeking to overturn at least portions of the legislation, and we expect they will continue to review and assess this legislation and possibly alternative health care reform proposals. We cannot predict whether new proposals will be made or adopted, when they may be adopted or what impact they may have on us if they are adopted.

Our restated certificate of incorporation, our amended and restated by-laws, our stockholder rights agreement and Delaware law could deter a change of our management which could discourage or delay offers to acquire us.

          Certain provisions of Delaware law and of our restated certificate of incorporation, as amended, and amended and restated by-laws could discourage or make it more difficult to accomplish a proxy contest or other change in our management or the acquisition of control by a holder of a substantial amount of our voting stock. It is possible that these provisions could make it more difficult to accomplish, or could deter, transactions that stockholders may otherwise consider to be in their best interests or the best interests of us. Further, the rights issued under the stockholder rights agreement would cause substantial dilution to a person or group that attempts to acquire us on terms not approved in advance by our Board of Directors.

The price of our common stock is volatile, and is likely to continue to fluctuate due to reasons beyond our control.

          The market price of our common stock has been, and likely will continue to be, highly volatile. Factors, including our financial results or our competitors’ financial results, clinical trial and research development announcements and government regulatory action affecting our potential products in both the United States and foreign countries, have had, and may continue to have, a significant effect on our results of operations and on the market price of our common stock. We cannot assure you that your investment in our common stock will not fluctuate significantly. One or more of these factors could significantly harm our business and cause a decline in the price of our common stock in the public market. Substantially all of the shares of our common stock issuable upon exercise of outstanding options and warrants have been registered for resale or are available for sale pursuant to Rule 144 under the Securities Act of 1933, as amended, and may be sold from time to time. Such sales, as well as future sales of our common stock by existing stockholders, or the perception that sales may occur at any time, could adversely affect the market price of

our common stock. In addition, potential dilutive effects of future sales of our common stock by existing stockholders, the Company and LPC pursuant to this prospectus could have an adverse effect on the market price of our common stock.

Risks Related to the LPC Transaction

Our facility with LPC will not be sufficient to satisfy our capital requirements for all of our contemplated clinical trials.

          We may direct LPC to purchase up to $20,000,000 worth of shares of our common stock under our agreement over a 36-month period, in amounts of up to $200,000, which amounts may be increased under certain circumstances. Assuming a purchase price of $1.00 per share (the closing sale price of our common stock on December 1, 2011) and the purchase by LPC of the full number of purchase shares registered under this prospectus, the proceeds to us would be $4,250,000. The extent to which we rely on LPC as a source of funding will depend on a number of factors, including the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources. If obtaining sufficient funding from LPC were to prove impracticable or prohibitively dilutive, we will need to secure another source of funding in order to satisfy our working capital needs. Even if we sell the maximum amount we are eligible to sell to LPC under the Purchase Agreement, we may still need additional capital to fully implement our business, operating and development plans. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences would have a material adverse effect on our business, operating results, financial condition and prospects.

The sale of our common stock to LPC may cause dilution and the resales of such shares by LPC may cause the price of our common stock to decline.

          In connection with entering into the Purchase Agreement, we authorized the issuance to LPC of up to $20,000,000 worth of shares of our common stock, subject to certain limitations, plus 899,101 shares of common stock as commitment shares payable to LPC. The number of shares ultimately offered for resale by LPC under this prospectus is dependent upon the number of shares we sell to LPC under the Purchase Agreement. The purchase price for the common stock we may sell to LPC pursuant to the Purchase Agreement will fluctuate based on the trading price of our common stock in the public market. All 4,849,101 shares registered in this offering are expected to be freely tradable. We may sell the shares registered in this offering to LPC during the 36-month period following the date of this prospectus, at any time, in our sole discretion. Depending upon market liquidity during that period, a sale of shares in this offering at any given time could cause the trading price of our common stock to decline. We have issued certain commitment shares to LPC and we may sell additional shares to LPC under the Purchase Agreement. LPC may sell all, some or none of the shares we have issued or may issue in the future, to LPC and any such resales of these shares by LPC may result in substantial dilution to the interests of our existing stockholders. In addition, if we sell a substantial number of shares to LPC in this offering, or if investors expect that we will do so, the actual sales of shares or the mere existence of the facility with LPC may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that may be more favorable to us than sales to LPC under the LPC facility.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

          The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This prospectus contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this prospectus, and they may also be made a part of this prospectus by reference to other documents filed with the SEC, which is known as “incorporation by reference.”

          Words such as “may,” “anticipate,” “estimate,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. All forward-looking statements are management’s present expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Forward-looking statements may include the following:

	•		the initiation, timing, progress and results of our preclinical and clinical trials and our research and development programs;
	•		the further preclinical or clinical development and commercialization of our product candidates;
	•		the potential benefits of our product candidates over other therapies;
	•		the timing, costs and other limitations involved in obtaining regulatory approval for any product;
	•		our ability to continue as a going concern and to operate our business with our constrained financial resources;
	•		our ability to carry out the objectives of our restructuring plan by focusing our capital resources on our most promising early-stage clinical programs and further reduce our cash utilization;
	•		our ability to enter into any collaboration with respect to our product candidates;
	•		our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
	•		our ability to retain the services of our current executive officers, directors and principal consultants;
	•		our estimates of future performance; and
	•		our estimates regarding anticipated operating losses, future revenue, expenses, capital requirements and our needs for additional financing.

          These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” beginning on page 7 that may cause our or our industry’s actual results, levels of activity, performance or achievements to differ from those expressed or implied by such forward-looking statements. Before deciding to purchase our securities, you should carefully consider the risks described in the “Risk Factors” section of this prospectus supplement, in addition to the other information set forth in this prospectus supplement, the accompanying prospectus and in the documents incorporated by reference herein and therein.

          Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as may be required by law, we do not intend to update any of the forward-looking statements for any reason after the date of this prospectus supplement to conform such statement to actual results or if new information becomes available.

          All forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.

USE OF PROCEEDS

     This prospectus relates to shares of our common stock that may be offered and sold from time to time by the selling stockholder, LPC. We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholder pursuant to this prospectus. We may receive proceeds of up to $20,000,000 under the Purchase Agreement from the sale of our common stock to LPC. Assuming a purchase price of $1.00 per share (the closing sale price of our common stock on December 1, 2011) and the purchase by LPC of the full number of purchase shares registered under this prospectus, the proceeds to us would be $4,250,000. Any issuance of shares by us to LPC under the Purchase Agreement will be made pursuant to an exemption from the registration requirements of the Securities Act. The proceeds that we receive under the Purchase Agreement are expected to be used toward funding a portion of the costs of our FACT 2 study in anaplastic thyroid cancer and for general corporate purposes, including capital expenditures, the advancement of our product candidates in clinical and preclinical trials, and to meet working capital needs. The amounts and timing of the expenditures will depend on numerous factors, such as the timing and progress of our clinical trials and research and development efforts, technological advances and the competitive environment for our product candidates. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from the sale of shares to LPC. Accordingly, we will retain broad discretion over the use of these proceeds, if any.

THE LPC TRANSACTION

General

          On November 28, 2011, we executed a Purchase Agreement and a Registration Rights Agreement with Lincoln Park Capital Fund, LLC, or LPC. Under the Purchase Agreement, we have the right to sell up to $20,000,000 of our common stock, subject to certain limitations, to LPC at our discretion, as described below.

          Pursuant to the Registration Rights Agreement, we are filing this registration statement and prospectus with the Securities and Exchange Commission, or the SEC, covering shares that have been issued or may be issued to LPC under the Purchase Agreement. We do not have the right to commence any sales of our shares to LPC until the SEC has declared effective the registration statement of which this prospectus is a part. After the registration statement is declared effective, over approximately 36 months, we have the right, subject to the terms of the Purchase Agreement, to direct LPC to purchase up to $20,000,000 of our common stock in amounts up to $200,000 as often as every two business days under certain conditions. We can also accelerate the amount of our stock to be purchased under certain circumstances. There are no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales of our common stock to LPC. The purchase price of the shares will be based on the market prices of our shares immediately preceding the time of sale as computed under the Purchase Agreement without any fixed discount. We may at any time in our sole discretion terminate the Purchase Agreement without fee, penalty or cost upon one business day’s notice. We issued 299,700 shares of our stock to LPC as an initial commitment fee for entering into the agreement and we may issue up to 599,401 shares, of which only 299,401 are included in this prospectus, as an additional commitment fee on a pro rata basis as LPC purchases up to $20,000,000 of our stock in our discretion. For example, if we elect, at our sole discretion, to require LPC to purchase $200,000 of our stock then we would issue 5,994 shares of the pro rata additional commitment fee, which is the product of $200,000, the amount we have elected to sell, divided by $20,000,000, the total amount we can sell to LPC under the Purchase Agreement, multiplied by 599,401, the maximum number of additional commitment shares. The additional commitment shares will only be issued pursuant to this formula if, as and when we elect to sell our stock to LPC. LPC may not assign or transfer its rights or obligations under the Purchase Agreement.

          As of November 28, 2011, there were 14,879,857 shares outstanding, including 14,834,560 shares held by non-affiliates, excluding the 299,700 shares which we have already issued and are being offered by LPC pursuant to this prospectus. In the aggregate, 4,849,101 shares are being offered under this prospectus, which includes 299,700 shares that we issued as an initial commitment fee and an additional 4,549,401 shares which are yet to be issued. Of that additional number, we may issue 299,401 shares as an additional commitment fee on a pro rata basis as LPC purchases up to $20,000,000 of our stock in our discretion and the remainder represent shares we may sell to LPC under the Purchase Agreement. If all of the 4,849,101 shares offered by LPC under this prospectus were issued and outstanding as of the date hereof, such shares would represent 24.58% of the total common stock outstanding or 24.64% of the outstanding shares held by non-affiliates, as adjusted, as of the date hereof. If we elect to issue and sell more than the 4,849,101 shares offered under this prospectus to LPC, which we have the right, but not the obligation, to do, we must first register any such additional shares under the Securities Act, which could cause substantial dilution to our stockholders. In addition, depending on the average price at which we sell shares to LPC, if we seek to issue and sell more than 2,974,483 shares, representing 19.9% of our outstanding common stock on November 28, 2011, to LPC, we may be required to seek shareholder approval in order to remain in compliance with The NASDAQ Capital Market rules, which require shareholder approval for the issuance of more than 19.9% of a company’s outstanding shares in a private placement at a discount to the greater of market or book value of the shares. The number of shares ultimately offered for resale by LPC is dependent upon the number of shares we sell to LPC under the Purchase Agreement.

Purchase of Shares Under The Purchase Agreement

          Under the Purchase Agreement, on any business day selected by us and as often as every two business days, we may direct LPC to purchase up to $200,000 of our common stock. The purchase price per share is equal to the lesser of:

	•		the lowest sale price of our common stock on the purchase date; or
	•		the average of the three (3) lowest closing sale prices of our common stock during the twelve (12) consecutive business days prior to the purchase date.

          The purchase price will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during the business days used to compute the purchase price.

          We may increase the purchase amount from $200,000 to the following amounts:

	•		up to $400,000, if the closing sale price of our common stock is not below $1.20 per share on the purchase date;
	•		up to $600,000, if the closing sale price of our common stock is not below $2.20 per share on the purchase date;

	•		up to $800,000, if the closing sale price of our common stock is not below $3.00 per share on the purchase date; and
	•		up to $1,200,000, if the closing sale price of our common stock is not below $4.50 per share on the purchase date.

Minimum Purchase Price

          Under the Purchase Agreement, we have set a minimum purchase price, or the floor price, of $0.50, which means that LPC shall not have the right or the obligation to purchase any of our common stock if the purchase price would be less than the floor price.

Events of Default

             The following events constitute events of default under the Purchase Agreement:

	•		the effectiveness of the registration statement of which this prospectus is a part of lapses for any reason (including, without limitation, the issuance of a stop order) or is unavailable to LPC for sale of our common stock offered hereby and such lapse or unavailability continues for a period of ten (10) consecutive business days or for more than an aggregate of thirty (30) business days in any 365-day period;
	•		suspension by our principal market of our common stock from trading for a period of three (3) consecutive business days;
	•		the delisting of our common stock from our principal market, provided our common stock is not immediately thereafter trading on the New York Stock Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market, the OTC Bulletin Board (or nationally recognized successor thereto or comparable markets), or the NYSE Amex;
	•		the transfer agent’s failure for five (5) business days to issue to LPC shares of our common stock to which LPC is entitled under the Purchase Agreement;
	•		any material breach of the representations or warranties or covenants contained in the Purchase Agreement or any related agreements which has or which would reasonably be expected to have a material adverse effect on us, subject to a cure period of five (5) business days;
	•		any voluntary or involuntary participation or threatened participation in insolvency or bankruptcy proceedings by or against us; or
	•		if we reach the share limit under applicable NASDAQ Capital Market rules (generally, 2,974,483 shares, or 19.99% of our outstanding shares prior to entering into the Purchase Agreement with LPC), to the extent applicable under NASDAQ Capital Market rules, and we have not obtained any necessary shareholder approvals.

          LPC does not have the right to terminate the Purchase Agreement upon any of the events of default set forth above. In the event of bankruptcy proceedings by or against us, the Purchase Agreement will automatically terminate without action of any party. During an event of default, all of which are outside the control of LPC, shares of our common stock cannot be sold by us to LPC or purchased by LPC under the terms of the Purchase Agreement.

Our Termination Rights

          We have the unconditional right at any time for any reason to give notice to LPC terminating the Purchase Agreement without any cost to us.

No Short-Selling or Hedging by LPC

          LPC has agreed that neither it nor any of its affiliates shall engage in any direct or indirect short-selling or hedging of our common stock during any time following the date of the Purchase Agreement until the termination of the Purchase Agreement.

Effect of Performance of the Purchase Agreement on Our Stockholders

          All 4,849,101 shares registered in this offering are expected to be freely tradable. It is anticipated that shares registered in this offering will be sold over a period of up to 36 months from the date of this prospectus. The sale by LPC of a significant amount of shares registered in this offering at any given time could cause the market price of our common stock to decline and to be highly volatile. LPC may ultimately purchase all, some or none of the 4,549,401 shares of common stock not yet issued but registered in this offering. If we sell these shares to LPC, LPC may sell all, some or none of these shares immediately or in the future and any such resales of these shares by LPC may result in substantial dilution to the interests of our existing stockholders. In addition, if we sell a substantial number of shares to LPC in this offering, or if investors expect that we will do so, the actual sales of shares or the mere existence of the facility with LPC may make it more difficult for us to sell equity or equity-related securities in the future at a time and

at a price that may be more favorable to us than sales to LPC under the LPC facility. However, we have the right to control the timing and amount of any sales of our shares to LPC and we may terminate the Purchase Agreement at any time at our discretion without any cost to us.

          In connection with entering into the Purchase Agreement, we authorized the sale to LPC of up to $20,000,000 worth of shares of our common stock, exclusive of the 299,700 initial commitment shares issued to LPC on November 28, 2011 and the 599,401 additional commitment shares that may be issued to LPC. We have the right to terminate the agreement without any payment or liability to LPC at any time, including in the event that all $20,000,000 is sold to LPC under the Purchase Agreement. The number of shares ultimately offered for resale by LPC is dependent upon the number of shares we sell to LPC under the Purchase Agreement. The following table sets forth the amount of proceeds we would receive from LPC from the sale of shares that are registered in this offering at varying purchase prices:

		Number of		Percentage of
		Registered Shares		Outstanding Shares		Proceeds from the
Assumed		to be Issued if		After Giving Effect		Sale of Shares
Average		Full		to the Issuance to		to LPC Under the
Purchase Price		Purchase (1) (2)		LPC (3)		Purchase Agreement
$0.50(4)		4,482,235		23.06%		$2,241,117
$1.00(5)		4,417,023		23.06%		$4,417,023
$2.50		4,250,000		23.06%		$10,625,000
$5.00		4,000,000		22.07%		$20,000,000
$10.00		2,000,000		13.16%		$20,000,000

SELLING STOCKHOLDER

          This prospectus relates to the possible resale by the selling stockholder, LPC, of shares of common stock that we may issue pursuant to the Purchase Agreement we entered into with LPC on November 28, 2011. We are filing the registration statement of which this prospectus is a part pursuant to the provisions of the Registration Rights Agreement we entered into with LPC on November 28, 2011, in which we agreed to provide certain registration rights with respect to the sale to LPC under the Purchase Agreement of up to $20,000,000 of common stock, subject to certain limitations, over a thirty-six (36) month period.

          LPC, as the selling stockholder, may, from time to time, offer and sell pursuant to this prospectus any or all of the shares that we sell to LPC under the Purchase Agreement.

          The following table presents information regarding the selling stockholder and the shares that it may offer and sell from time to time under this prospectus. This table is prepared based on information supplied to us by the selling stockholder, and reflects holdings as of December 1, 2011. Neither the selling stockholder nor any of its affiliates has held a position or office, or had any other material relationship, with us. As used in this prospectus, the term “selling stockholder” includes LPC and any donees, pledgees, transferees or other successors in interest selling shares received after the date of this prospectus from a selling stockholder as a gift, pledge or other non-sale related transfer. The number of shares in the column “Number of Shares Being Offered” represents all of the shares that the selling stockholder may offer under this prospectus. The selling stockholder may sell some, all or none of its shares. We do not know how long the selling stockholder will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the selling stockholder regarding the sale of any of the shares.

          Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act. The percentage of shares beneficially owned prior to the offering is based both on 15,181,094 shares of our common stock actually outstanding as of December 1, 2011 and on the assumption that all shares of common stock issuable under the Purchase Agreement are outstanding as of that date.

Shares to be Sold

in the Offering

Assuming The

Percentage of

Company Issues The

Percentage of

Shares Beneficially

Outstanding Shares

Maximum Number of

Outstanding Shares

Owned Before

Beneficially Owned

Shares Under the

Beneficially Owned

Selling Stockholder

Offering

Before Offering

Purchase Agreement

After Offering

Lincoln Park Capital Fund, LLC (1)

299,700

(2)

2.0

%(2)

4,849,101

*

PLAN OF DISTRIBUTION

          The common stock offered by this prospectus is being offered by Lincoln Park Capital Fund, LLC, the selling stockholder. The common stock may be sold or distributed from time to time by the selling stockholder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of the common stock offered by this prospectus may be effected in one or more of the following methods:

	•		ordinary brokers’ transactions;
	•		transactions involving cross or block trades;
	•		through brokers, dealers, or underwriters who may act solely as agents;
	•		“at the market” into an existing market for the common stock;
	•		in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents;
	•		in privately negotiated transactions; or
	•		any combination of the foregoing.

          In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the registration or qualification requirement is available and complied with.

          Brokers, dealers, underwriters, or agents participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts, or concessions from the selling stockholder and/or purchasers of the common stock for whom the broker-dealers may act as agent. The compensation paid to a particular broker-dealer may be less than or in excess of customary commissions.

          LPC is an “underwriter” within the meaning of the Securities Act.

          Neither we nor LPC can presently estimate the amount of compensation that any agent will receive. We know of no existing arrangements between LPC, any other shareholder, broker, dealer, underwriter, or agent relating to the sale or distribution of the shares offered by this prospectus. At the time a particular offer of shares is made, a prospectus supplement, if required, will be distributed that will set forth the names of any agents, underwriters, or dealers and any compensation from the selling stockholder, and any other required information.

          We will pay all of the expenses incident to the registration, offering, and sale of the shares to the public other than commissions or discounts of underwriters, broker-dealers, or agents. We have also agreed to indemnify LPC and related persons against specified liabilities, including liabilities under the Securities Act.

          Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.

          LPC and its affiliates have agreed not to engage in any direct or indirect short selling or hedging of our common stock during the term of the Purchase Agreement.

          We have advised LPC that while it is engaged in a distribution of the shares included in this prospectus it is required to comply with Regulation M promulgated under the Securities Exchange Act of 1934, as amended. With certain exceptions, Regulation M precludes the selling stockholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the shares offered hereby this prospectus.

          This offering will terminate on the date that all shares offered by this prospectus have been sold by LPC.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

          Our common stock is traded on The NASDAQ Capital Market under the symbol “OXGN.” Prior to March 3, 2011, our common stock was traded on The NASDAQ Global Market under the symbol “OXGN.” The following table sets forth the high and low sales price per share for our common stock on The NASDAQ Global Market and The NASDAQ Capital Market, as applicable, for each quarterly period during the two most recent fiscal years and subsequent interim periods.

          In February 2011, our board of directors voted unanimously to implement a 1:20 reverse stock split of our common stock, following authorization of the reverse split by a stockholder vote on December 21, 2010. The reverse split became effective on February 22, 2011. All of the per share sales prices shown in the table below have been adjusted to reflect the effect of this reverse split.

		Fiscal Year 2011								Fiscal Year 2010								Fiscal Year 2009
		High				Low				High				Low				High				Low
First Quarter		$	5.20			$	1.69			$	27.60			$	20.00			$	17.80			$	10.40
Second Quarter		$	6.38			$	1.52			$	26.40			$	7.40			$	55.60			$	14.20
Third Quarter		$	2.62			$	1.00			$	11.00			$	5.20			$	47.40			$	26.20
Fourth Quarter		$	1.97	(1)		$	0.82	(1)		$	6.00			$	3.80			$	34.00			$	20.20

          On December 1, 2011, the closing price of our common stock on The NASDAQ Capital Market was $1.00 per share. As of December 1, 2011, there were approximately 80 stockholders of record of the approximately 15,181,094 outstanding shares of our common stock. We believe, based on the number of proxy statements and related materials distributed in connection with our 2011 Annual Meeting of Stockholders, that there are approximately 10,735 beneficial owners of our common stock.

Dividend Policy

          We have not declared or paid any cash dividends on our common stock since our inception in 1988, and do not intend to pay cash dividends in the foreseeable future. We presently intend to retain future earnings, if any, to finance the growth and development of our business.

SELECTED FINANCIAL DATA

          The following tables set forth financial data with respect to the Company for each of the five years in the period ended December 31, 2010, and selected quarterly data for the quarters and nine month periods ended September 30, 2011 and September 30, 2010. The selected financial data for each of the five years ended December 31, 2010 has been derived from the audited consolidated financial statements of the Company. The financial data for the quarterly financial data for the quarters and nine month periods ended September 30, 2011 and September 30, 2010 are derived from unaudited financial statements. The unaudited financial statements include all adjustments, consisting of normal recurring accruals, which the Company considers necessary for a fair presentation of the financial position and the results of operations for these periods.

          Operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2011. The information below should be read in conjunction with the financial statements (and notes thereto) and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in this prospectus.

          In February 2011, our board of directors voted unanimously to implement a 1:20 reverse stock split of our common stock, following authorization of the reverse split by a stockholder vote on December 21, 2010. The reverse split became effective on February 22, 2011. All of the share and per share amounts discussed and shown in the statements and tables below have been adjusted to reflect the effect of this reverse split.

STATEMENT OF OPERATIONS DATA

		Years ended December 31,
		2010				2009				2008				2007				2006
		(Amounts in thousands except per share amounts)
STATEMENT OF OPERATIONS DATA:
License Revenue:		$	—			$	—			$	12			$	12			$	—
Operating costs and expenses:
Research and development			12,114				22,256				18,995				14,511				11,213
General and administrative			5,885				8,900				6,957				7,774				6,703
Restructuring			510				—				—				—				—
Total operating costs and expenses			18,509				31,156				25,952				22,285				17,916
Loss from operations			(18,509	)			(31,156	)			(25,940	)			(22,273	)			(17,916	)
Change in fair value of warrants and other financial instruments			(6,018	)			2,166				3,335				—				—
Investment income			17				110				618				1,955				2,502
Other income (expense), net			740				(63	)			66				(71	)			(43	)
Consolidated net loss		$	(23,770	)		$	(28,943	)		$	(21,921	)		$	(20,389	)		$	(15,457	)
Net loss attributed to non controlling interest		$	—			$	(4,215	)		$	(520	)		$	—			$	—
Net loss attributed to OXiGENE, Inc.		$	(23,770	)		$	(24,728	)		$	(21,401	)		$	(20,389	)		$	(15,457	)
Excess purchase price over carrying value of noncontrolling interest acquired in Symphony ViDA, Inc		$	—			$	(10,383	)		$	—			$	—			$	—
Net loss applicable to common stock		$	(23,770	)		$	(35,111	)		$	(21,401	)		$	(20,389	)		$	(15,457	)
Basic and diluted net loss per share attributed to OXiGENE, Inc. common shares		$	(5.96	)		$	(13.15	)		$	(13.96	)		$	(14.60	)		$	(11.19	)
Weighted-average number of common shares outstanding			3,988				2,671				1,533				1,397				1,381

		As of September 30,				As of December 31,
		2011				2010				2009				2008				2007				2006
						(Amounts in thousands except per share amounts)
BALANCE SHEET DATA:
Cash, restricted cash and equivalents and available-for-sale securities		$	12,664			$	4,677			$	14,072			$	18,918			$	28,438			$	45,839
Marketable securities held by Symphony ViDA, Inc., restricted			—				—				—				14,663				—				—
Working capital			9,964				1,797				6,356				28,320				23,880				42,083
Total assets			13,375				5,567				15,617				35,031				30,064				47,642
Total liabilities			2,978				10,822				9,818				6,292				5,207				4,222
Accumulated deficit			(215,008	)			(207,700	)			(183,930	)			(159,202	)			(137,801	)			(117,412	)
Noncontrolling interest							—				—				9,432				—				—
Total stockholders’ (deficit)equity		$	10,397			$	(5,255	)		$	5,799			$	28,739			$	24,857			$	43,420

     The amount related to loss attributed to non controlling interest in Symphony ViDA, Inc. (“ViDA”) represents the loss for the ViDA entity from its inception in October 2008 through the acquisition of ViDA in July 2009. The investments reported as held by ViDA represented the fair value of amounts held by ViDA and were included in the acquisition.

Quarterly Financial Data for 2011 and 2010

The following is a summary of the quarterly results of operations for the three and nine months ended September 30, 2011 and September 30, 2010: (Amounts in thousands)

		Three Months Ended
		September 30,				September 30,
		2011				2010
License revenue		$	—			$	—
Net loss			(3,513	)			(13,536	)
Basic and diluted net loss per share		$	(0.25	)		$	(3.47	)

		Nine Months Ended
		September 30,				September 30,
		2011				2010
|		|
License revenue		$	—			$	—
Net loss			(7,308	)			(22,027	)
Basic and diluted net loss per share		$	(0.74	)		$	(6.24	)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          The following discussion and analysis of financial condition and results of operations should be read together with our financial statements and accompanying notes appearing elsewhere in this prospectus. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

          We are a clinical-stage, biopharmaceutical company developing novel therapeutics to treat cancer and eye diseases. Our primary focus is the development of product candidates referred to as vascular disrupting agents, or VDAs, that selectively disable and destroy abnormal blood vessels that provide solid tumors a means of growth and survival and also are associated with visual impairment in a number of ophthalmological diseases and conditions. To date, more than 400 subjects have been treated with ZYBRESTAT, our lead candidate, in human clinical trials, and the drug candidate has generally been observed to be well-tolerated.

          In February 2011, our board of directors voted unanimously to implement a 1:20 reverse stock split of our common stock, following authorization of the reverse split by a shareholder vote on December 21, 2010. The reverse split became effective on February 22, 2011. All of the share and per share amounts discussed in this prospectus have been adjusted to reflect the effect of this reverse split.

          Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to intangible assets. We base our estimates on historical experience and on various other factors that are believed to be appropriate under the circumstances, the results of which form the basis for making the judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

          Our significant accounting policies are described in detail in Note 1 to our condensed consolidated financial statements for the fiscal year ended December 31, 2010 and in Note 1 to our condensed financial statements for the fiscal quarter ended September 30, 2011 included in this prospectus.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2011 and September 30, 2010

Revenue

          We reported no licensing revenue for the three months ended September 30, 2011 and September 30, 2010. As of September 30, 2011, our only source of potential revenue was from the license to a third party of our formerly owned Nicoplex and Thiol nutritional and diagnostic technology. Future revenues from this license agreement, if any, are expected to be minimal. We do not expect to generate material revenue or fee income in the near future unless we enter into a major licensing arrangement.

Costs and expenses

Summary

          The following table summarizes our operating expenses for the periods indicated, in thousands and as a percentage of total expenses. This table also provides the changes in our operating components and their percentages:

		Three Months ended September 30,
		2011								2010
						% of Total								% of Total
						Operating								Operating				Increase (Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
Research and development		$	1,098				31	%		$	2,379				65	%		$	(1,281	)			-54	%
General and administrative			1,309				37	%			1,256				35	%			53				4	%
Restructuring			1,146				32	%			—								1,146
Total operating expenses		$	3,553				100	%		$	3,635				100	%		$	(82	)			-2	%

Research and development expenses

          The table below summarizes the most significant components of our research and development expenses for the periods indicated, in thousands and as a percentage of total research and development expenses. The table also provides the changes in these components and their percentages:

		Three Months ended September 30,
		2011								2010
						% of Total								% of Total				Increase (Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
External services		$	500				46	%		$	1,510				63	%		$	(1,010	)			-67	%
Employee compensation and related			472				43	%			644				27	%			(172	)			-27	%
Employee stock-based compensation			5				0	%			62				3	%			(57	)			-92	%
Other			121				11	%			163				7	%			(42	)			-26	%
Total research and development		$	1,098				100	%		$	2,379				100	%		$	(1,281	)			-54	%

          The reduction in external services expenses for the quarter ended September 30, 2011 compared to the same three month period in 2010 is primarily attributable to a reduction in spending on all of our clinical projects for the comparable periods with the majority of the reduction coming from ZYBRESTAT for oncology program, most prominently our anaplastic thyriod cancer and non-small cell lung cancer projects. These two major studies have been progressing to conclusion over the last 12 to 18 months. In addition, we experienced reductions in expenses on our OXi4503 and ZYBRESTAT for ophthalmology programs for the comparable 2011 period, primarily related to our decision in February 2010 to scale back efforts on some of our projects in these areas.

          The reduction in employee compensation and related expenses for the quarter ended September 30, 2011 compared to the same three month period of 2010 is due to the reductions in our clinical project expenses noted above. In February 2010, we implemented a Company wide restructuring plan due to our decision to scale back activities in some of our ongoing clinical projects.

          We continue to evaluate next steps in the development of our clinical programs. As a result, research and development expenses in the future could vary significantly from those incurred in the 2011 fiscal year.

General and administrative expenses

          The table below summarizes the most significant components of our general and administrative expenses for the periods indicated, in thousands and as a percentage of total general and administrative expenses. The table also provides the changes in these components and their percentages:

		Three Months ended September 30,
		2011								2010
						% of Total								% of Total				Increase (Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
Employee compensation and related		$	410				31	%		$	456				36	%		$	(46	)			-10	%
Employee stock-based compensation			46				4	%			85				7	%			(39	)			-46	%
Consulting and professional services			494				38	%			453				36	%			41				9	%
Other			359				27	%			262				21	%			97				37	%
Total general and administrative		$	1,309				100	%		$	1,256				100	%		$	53				4	%

          General and administrative expenses remained fairly flat for the comparable three month periods ended September 30, 2011 and September 30, 2010. Employee stock-based compensation expense can vary significantly from period to period due to the timing and vesting of option grants. During fiscal 2011, there have not been any stock option grants to employees. The increase in other expense for the three month period ended September 30, 2011 compared to the same three month period ended September 30, 2010 is attributable to higher fees and taxes related to being a public company.

Restructuring Plan

          On September 1, 2011, we announced a restructuring plan designed to focus our capital resources on our most promising early-stage clinical programs and further reduce our cash utilization.

          We offered severance benefits to the terminated employees, and anticipate recording a total charge of approximately $1,200,000, primarily associated with personnel-related termination costs. In order to provide for an orderly transition, we are implementing the reduction in work force in a phased manner. We took a restructuring charge in the third quarter of 2011 of approximately $1,146,000, with the remainder expected to be taken over the following two quarters as the transition is effected. Substantially all of the charge is expected to represent cash expenditures.

Other Income and Expenses

          The table below summarizes Other Income and Expense in our Statements of Operations for the three month periods ended September 30, 2011 and September 30, 2010, in thousands:

		Three months ended September 30,								Increase (Decrease)
		2011				2010				Amount				%
Change in fair value of warrants and other financial instruments		$	40			$	(9,893	)		$	9,933				-100	%
Investment income			1				3				(2	)			-67	%
Other (expense) income, net			(1	)			(11	)			10				-91	%
Total		$	40			$	(9,901	)		$	9,941				-100	%

          We recorded an unrealized (non cash) loss in 2011 and gain in 2010 as a result of the change in the estimated Fair Market Value of our common stock warrants issued in connection with the offerings of our common stock as discussed in the Warrants section of Note 5 to the financial statements.

          The table below summarizes the components of the change in fair value of warrants and other financial instruments for the three month periods ended September 30, 2011 and September 30, 2010, in thousands.

		Three months ended September 30,
		2011				2010
Committed Equity Financing Facility Warrants		$	—			$	5
Direct Registration Warrants			40				99
Private Placement Warrants			—				(9,997	)
Total gain (loss) on change in fair market value of derivatives		$	40			$	(9,893	)

Nine Months Ended September 30, 2011 and September 30, 2010

Revenue

     We reported no licensing revenue for the nine months ended September 30, 2011 and September 30, 2010. As of September 30, 2011, our only source of potential revenue is from the license to a third party of our formerly owned Nicoplex and Thiol nutritional and diagnostic technology. Future revenues from this license agreement, if any, are expected to be minimal. We do not expect to generate material revenue or fee income unless we enter into a major licensing arrangement.

Costs and expenses

Summary

     The following table summarizes our operating expenses for the periods indicated, in thousands and as a percentage of total expenses. This table also provides the changes in our operating components and their percentages:

		Nine Months ended September 30,
		2011								2010
						% of Total								% of Total
						Operating								Operating				Increase (Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
Research and development		$	4,280				45	%		$	9,912				66	%		$	(5,632	)			-57	%
General and administrative			4,095				43	%			4,637				31	%			(542	)			-12	%
Restructuring			1,146				12	%			510				3	%			636				125	%
Total operating expenses		$	9,521				100	%		$	15,059				100	%		$	(5,538	)			-37	%

Research and development expenses

          The table below summarizes the most significant components of our research and development expenses for the periods indicated, in thousands and as a percentage of total research and development expenses. The table also provides the changes in these components and their percentages:

		Nine Months ended September 30,
		2011								2010
						% of Total								% of Total				Increase (Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
External services		$	2,050				48	%		$	6,703				68	%		$	(4,653	)			-69	%
Employee compensation and related			1,664				39	%			2,579				26	%			(915	)			-35	%
Employee stock-based compensation			171				4	%			109				1	%			62				57	%
Other			395				9	%			521				5	%			(126	)			-24	%
Total research and development		$	4,280				100	%		$	9,912				100	%		$	(5,632	)			-57	%

          The reduction in external services expenses for the nine month period ended September 30, 2011 compared to the same nine month period in 2010 is primarily attributable to a reduction in spending on all of our clinical projects for the comparable periods with the majority of the reduction coming from ZYBRESTAT for oncology program, most prominently our anaplastic thyroid cancer and non-small cell lung cancer projects. These two major studies have been progressing to conclusion over the last 12 to 18 months. In addition, we experienced reductions in expenses on our OXi4503 and ZYBRESTAT for ophthalmology programs for the comparable 2011 period, primarily related to our decision in February 2010 to scale back efforts on some of our projects in these areas.

          The reduction in employee compensation and related expenses for the nine month period ended September 30, 2011 compared to the same nine month period of 2010 is due to the reductions in our clinical project expenses noted above. In February 2010, we implemented a Company wide restructuring plan due to our decision to scale back activities in some of our ongoing clinical projects.

          The increase in stock-based compensation expense for the nine month period ended September 30, 2011 compared to the same nine month period of 2010 is primarily due to the timing of issuance and vesting of stock options for the comparable periods.

          The reduction in other expenses for the nine month period ended September 30, 2011 compared to the same nine month period of 2010 is primarily due to a reduction in both our research and development facility related costs as well as program wide support costs for the comparable periods.

General and administrative expenses

          The table below summarizes the most significant components of our general and administrative expenses for the periods indicated, in thousands and as a percentage of total general and administrative expenses. The table also provides the changes in these components and their percentages:

		Nine Months ended September 30,
		2011								2010
						% of Total								% of Total				Increase (Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
Employee compensation and related		$	1,395				34	%		$	1,591				34	%		$	(196	)			-12	%
Employee stock-based compensation			331				8	%			312				7	%		$	19				6	%
Consulting and professional services			1,460				36	%			1,909				41	%		$	(449	)			-24	%
Other			909				22	%			825				18	%		$	84				10	%
Total general and administrative		$	4,095				100	%		$	4,637				100	%		$	(542	)			-12	%

          The reduction in employee compensation and related expenses for the nine month period ended September 30, 2011 compared to the same nine month period of 2010 is due to a reduction in our average full time equivalents for the comparable periods. In February 2010, we implemented a Company wide restructuring plan due to our decision to scale back activities in some of our ongoing clinical projects.

          The reduction in consulting and professional services expenses for the nine month period ended September 30, 2011 compared to the same nine month period of 2010 is primarily due to one time costs incurred in our attempt to acquire Vaxgen Inc and due to the PIPE financing deal that did not recur in the 2011 period and lower board member compensation attributable to lower stock cost basis during the 2011 nine month period as board members are paid in the form of non-cash stock grants. In addition, we experienced lower legal, accounting and service provider expenses due to fewer significant transactions during the 2011 period.

          Restructuring Plan

          On September 1, 2011, we announced a restructuring plan designed to focus our capital resources on our most promising early-stage clinical programs and further reduce our cash utilization.

          We offered severance benefits to the terminated employees, and anticipate recording a total charge of approximately $1,200,000, primarily associated with personnel-related termination costs. In order to provide for an orderly transition, we are implementing the reduction in work force in a phased manner. We took a restructuring charge in the third quarter of 2011 of approximately $1,146,000, with the remainder expected to be taken over the following two quarters as the transition is effected. Substantially all of the charge is expected to represent cash expenditures.

          We also executed a restructuring in February 2010, designed to focus our existing resources on our highest-value clinical assets and reduce our cash utilization. We incurred a charge of $510,000, primarily associated with personnel-related termination costs in connection with this restructuring.

Other Income and Expenses

          The table below summarizes Other Income and Expense in our Statements of Operations for the nine month periods ended September 30, 2011 and September 30, 2010, in thousands:

		Nine months ended September 30,								Increase (Decrease)
		2011				2010				Amount				%
Change in fair value of warrants and other financial instruments		$	2,219			$	(6,987	)		$	9,206				-132	%
Investment income			3				14				(11	)			-79	%
Other (expense) income, net			(9	)			5				(14	)			-280	%
Total		$	2,213			$	(6,968	)		$	9,181				-132	%

          We recorded an unrealized (non cash) gain in both the 2011 and 2010 periods as a result of the change in the estimated Fair Market Value of our common stock warrants issued in connection with the offerings as discussed in the Warrants section of Note 4 to the financial statements.

          The table below summarizes the components of the change in fair value of warrants for the nine month periods ended September 30, 2011 and September 30, 2010, in thousands.

		Nine months ended September 30,
		2011				2010
Committed Equity Financing Facility Warrants		$	3			$	95
Direct Registration Warrants			99				2,077
Excess of value of the Private Placement Warrants at issuance over the net proceeds of the offering			—				(4,433	)
Gain recognized in connection with warrant exchange agreements			690				—
Private Placement Warrants			1,427				(4,726	)
Total gain (loss) on change in fair market value of derivatives		$	2,219			$	(6,987	)

Years ended December 31, 2010 and 2009

Revenues

          We did not recognize any license revenue in the years ended December 31, 2010 and 2009, in connection with the license of our nutritional and diagnostic technology or otherwise. Future revenues, if any, from this license agreement are expected to be minimal.

          Our future revenues will depend upon our ability to establish collaborations with respect to, and generate revenues from products currently under development by us. We expect that we will not generate meaningful revenue unless and until we enter into new collaborations providing for funding through the payment of licensing fees and up-front payments.

          Costs and Expenses

          The following table summarizes our operating expenses for the periods indicated, in thousands and as a percentage of total expenses:

		2010								2009
						% of Total								% of Total				Increase
						Operating								Operating				(Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
Research and development		$	12,114				65	%		$	22,256				71	%		$	(10,142	)			-46	%
General and administrative			5,885				32	%			8,900				29	%			(3,015	)			-34	%
Restructuring			510				3	%			—								510				N/A
Total operating expenses		$	18,509				100	%		$	31,156				100	%		$	(12,647	)			-41	%

Research and development expenses

          The table below summarizes the most significant components of our research and development expenses for the periods indicated, in thousands and as a percentage of total research and development expenses and provides the changes in these components and their percentages:

		2010								2009								Increase
						% of Total								% of Total				(Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
External services		$	7,944				66	%		$	13,233				59	%		$	(5,289	)			-40	%
Employee compensation and related			3,247				27	%			7,692				35	%			(4,445	)			-58	%
Stock-based compensation			241				1	%			184				1	%			57				31	%
Other			682				6	%			1,147				5	%			(465	)			-41	%
Total research and development		$	12,114				100	%		$	22,256				100	%		$	(10,142	)			-46	%

          The reduction in external services expenses for the year ended December 31, 2010 compared to the same twelve month period in 2009 is primarily attributable to a reduction in spending on our ZYBRESTAT for Oncology program of approximately $3.3 million. This reduction is primarily attributable to lower costs on our ATC study for the comparable 2010 period in connection with our decision to discontinue further recruitment of patients on this study in February 2010. In addition, we experienced reductions in expenses on both our OXi4503 and ZYBRESTAT for Ophthalmology programs for the comparable 2010 period, primarily related to our decision in February 2010 to scale back efforts in some of our projects in these areas as well.

          The reduction in employee compensation and related expenses for the year ended December 31, 2010 compared to the same twelve month period of 2009 is due to a 50% reduction in our average full time equivalents for the comparable 2010 period. In February 2010 we implemented a Company-wide restructuring plan due to our decision to scale back activities in some of our ongoing clinical projects.

          The reduction in other expenses for the year ended December 31, 2010 compared to the same twelve month period of 2009 is primarily due to a reduction in both our research and development facility related costs as well as program wide support costs for the comparable 2010 period.

          General and administrative expenses

          The table below summarizes the most significant components of our general and administrative expenses for the periods indicated, in thousands and as a percentage of total general and administrative expenses and provides the changes in these components and their percentages:

		2010								2009								Increase
						% of Total								% of Total				(Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
Employee compensation and related		$	2,049				35	%		$	3,165				36	%		$	(1,116	)			-35	%
Stock-based compensation			453				8	%			272				3	%		$	181				67	%
Consulting and professional services			2,295				39	%			4,409				50	%		$	(2,114	)			-48	%
Other			1,088				18	%			1,054				11	%		$	34				3	%
Total general and administrative		$	5,885				100	%		$	8,900				100	%		$	(3,015	)			-34	%

          The reduction in employee compensation and related expenses for the year ended December 31, 2010 compared to the same twelve month period of 2009 is due to a reduction in both our average full time equivalents of 16% and expenses in the 2009 period for administrative costs associated with the Symphony ViDA entity that did not recur in the 2010 period. In February 2010, we implemented a Company-wide restructuring plan due to our decision to scale back activities in some of our ongoing clinical projects. The number and scope of our clinical development projects affects how we staff and support those projects.

          The increase in stock based compensation expense for the year ended December 31, 2010 compared to the same twelve month period of 2009 is due to timing and vesting periods of option awards to employees.

          The reduction in consulting and professional services expenses for the year ended December 31, 2010 compared to the same twelve month period of 2009 is primarily due to a reduction in both recurring professional services fees including director and audit fees for the comparable periods as well as one time costs incurred in the 2009 period for corporate wide quality systems reviews and costs incurred in our attempt to acquire VaxGen Inc. that did not recur in the 2010 period.

          On February 11, 2010, we announced a restructuring plan designed to focus resources on our highest-value clinical assets and reduce our cash utilization. Key aspects of the restructuring and its effects on our current clinical trials are as follows:

	•		We continue to advance our high-priority Phase 2 ZYBRESTAT trial in non-small cell lung cancer (FALCON study), with updated safety and efficacy results anticipated for presentation at the upcoming American Society of Clinical Oncology (ASCO) meeting in June 2011.
	•		We stopped further enrollment in the Phase 2/3 FACT clinical trial in anaplastic thyroid cancer (ATC), but have continued to treat and follow all patients who enrolled in the study. We expect this approach to optimize our ability to gain useful additional insight into ZYBRESTAT’s antitumor activity earlier than the previously anticipated timeline, while also reducing cash utilization in 2010 and beyond.
	•		We discontinued enrolling patients in our OXi4503 Phase 1b trial in patients with hepatic tumors. We are evaluating the results received to date.
	•		We discontinued enrollment in our Phase 2 FAVOR study of ZYBRESTAT in polypoidal choroidal vasculopathy (PCV), a form of macular degeneration. After completing enrollment in the fall of 2010, we are considering next steps for this program.
	•		Future development decisions concerning the OXi4503 program and the ZYBRESTAT for ophthalmology program will be made following these analyses and additional review by our management and board of directors.
	•		In addition, we reduced our workforce by 20 employees or approximately 49%.

Other Income and Expenses

          The table below summarizes Other Income and Expense in our Income Statement for the years 2010 and 2009, in thousands.

										Increase
										(Decrease)
		2010				2009				Amount				%
Change in fair value of warrants and other financial instruments		$	(6,018	)		$	2,166			$	(8,184	)			-378	%
Investment income			17				110				(93	)			-85	%
Other income (expense), net			740				(63	)			803				1275	%
Total		$	(5,261	)		$	2,213			$	(7,474	)			-338	%

          We record unrealized (non cash) gain/(loss) as a result of a change in the estimated Fair Market Value (“FMV”) of our Derivative Liabilities and the common stock warrants issued in connection with our equity offerings as discussed in Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in the Company’s Common Stock, Note 1 to our financial statements, Summary of Significant Accounting Policies. In 2010, the loss primarily relates to the triggering of the full-ratchet provisions of the PIPE warrants, where the exercise price of each warrant was decreased, causing a greater warrant liability. In 2009, the gain primarily relates to the decline in the underlying fair value of the common stock.

          The decrease in Investment income of $93,000 for fiscal 2010 compared to fiscal 2009 is primarily a result of a reduction in our average month end cash balance available for investment during the respective periods.

          The Other income (expense) amounts are derived from our gain and loss on foreign currency exchange and reflect both a change in number of foreign clinical trials and the fluctuation in exchange rates. Also included in the fiscal 2010 amount is our receipt of $733,000 in connection with qualified investments in a qualifying therapeutic discovery project under section 48D of the Internal Revenue Code in November 2010.

          Tax Matters

          At December 31, 2010, the Company had a net operating loss carry-forward of approximately $74,444,000 for U.S. income tax purposes, which begin to expire for U.S. purposes through 2021. Due to the degree of uncertainty related to the ultimate use of these loss carry-forwards, we have fully reserved this future benefit. Additionally, the future utilization of the U.S. net operating loss carry-forwards is subject to limitations under the change in stock ownership rules of the Internal Revenue Service. The valuation allowance increased by approximately $5,640,000 and approximately $8,466,000 for the years ended December 31, 2010 and 2009, respectively, due primarily to the increase in net operating loss carry-forwards.

Years ended December 31, 2009 and 2008

          Revenues

          We recognized approximately $12,000 in licensing revenue in the year ended December 31, 2008, in connection with the license of our nutritional and diagnostic technology. We did not recognize any license revenue in the year ended December 31, 2009.

          Costs and Expenses

          The following table summarizes our operating expenses for the periods indicated, in thousands and as a percentage of total expenses:

		2009								2008
						% of Total								% of Total				Increase
						Operating								Operating				(Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
Research and development		$	22,256				71	%		$	18,995				73	%		$	3,261				17	%
General and administrative			8,900				29	%			6,957				27	%			1,943				28	%
Total operating expenses		$	31,156				100	%		$	25,952				100	%		$	5,204				20	%

          Research and development expenses

          The table below summarizes the most significant components of our research and development expenses for the periods indicated, in thousands and as a percentage of total research and development expenses and provides the changes in these components and their percentages:

		2009								2008
						% of Total								% of Total				Increase (Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
External services		$	13,233				59	%		$	13,273				70	%		$	(40	)			0	%
Employee compensation and related			7,692				35	%			4,490				24	%			3,202				71	%
Stock-based compensation			184				1	%			337				2	%			(153	)			-45	%
Other			1,147				5	%			895				4	%			252				28	%
Total research and development		$	22,256				100	%		$	18,995				100	%		$	3,261				17	%

          The most significant component of the increase in research and development expenses in fiscal 2009 over fiscal 2008 of $3,261,000 was for employee compensation and related expenses. In fiscal 2009, in order to support our multiple worldwide clinical studies, one of which was a registrational study, we experienced an increase in our average headcount of approximately 13 R&D employees or approximately 66%. This resulted in increases in salaries, benefits, recruitment costs and travel costs in fiscal 2009 over fiscal 2008. In addition, we incurred one-time severance expenses of approximately $690,000 primarily associated with two executives who departed the Company in fiscal 2009. The increase in R&D headcount described above also contributed to the increase in Facilities and related costs of $165,000 in fiscal 2009 over fiscal 2008. The decrease in stock based compensation of $153,000 in fiscal 2009 from fiscal 2008 was as a result of forfeitures of grants by executives and non-recurring vesting expense in 2009 of restricted stock grants.

          With regards to the external services component of our research and development expenses, we experienced a decrease of approximately $1,000,000 on our ZYBRESTAT for oncology program in fiscal 2009 from fiscal 2008 as we concluded our Phase 2 trial for the treatment of platinum resistant ovarian cancer and a number of other smaller studies in fiscal 2009. We increased expenditures in fiscal 2009 versus fiscal 2008 by approximately $965,000 in our OXi4503 program which includes our Phase 1 trial of OXi4503 in solid tumors and our Phase 1 trial of ZYBRESTAT in combination with bevacizumab in solid tumors. We also increased expenditures in fiscal 2009 versus fiscal 2008 in our ZYBRESTAT for Ophthalmology program by approximately $1,369,000, primarily attributable to the initiation of our PCV study. The increases in expenditures on our OXi4503 and ZYBRESTAT for Ophthalmology programs were offset by a decrease in Non-clinical expenditures for those programs of approximately $800,000 in fiscal 2009 versus fiscal 2008.

          General and administrative expenses

          The table below summarizes the most significant components of our general and administrative expenses for the periods indicated, in thousands and as a percentage of total general and administrative expenses and provides the changes in these components and their percentages:

		2009								2008								Increase
						% of Total								% of Total				(Decrease)
		Amount				Expenses				Amount				Expenses				Amount				%
Employee compensation and related		$	3,165				36	%		$	2,604				37	%		$	561				22	%
Stock-based compensation			272				3	%			663				10	%		$	(391	)			-59	%
Consulting and professional services			4,409				50	%			2,498				36	%		$	1,911				77	%
Other			1,054				11	%			1,192				17	%		$	(138	)			-12	%
Total general and administrative		$	8,900				100	%		$	6,957				100	%		$	1,943				28	%